8 Catastrophic Startup Mistakes And How To Fix Them

startup mistakes and how to fix them

What is the most catastrophic choice — think hiring or funding — you’ve made as an entrepreneur and how did you recover from the failure?


1. Not Having a Subjective Interview Process

Derek-Capo140“At first, our business was hiring based on a mix of a candidate’s resume and the “gut feeling” we got when interviewing him. I realized this wasn’t effective because an interviewer could be sad or happy on the day of an interview, which could affect the gut feeling toward the new hire. When we didn’t have a formal interview process, we fired or had people quit because our interviews didn’t weed out the people that best fit our culture and attention to customer service. Once we implemented a better process and had customers take a test, it increased the quality of the staff significantly.”


-DEREK CAPO, Next Step China



2. Hiring for Skills Instead of Culture

ALEX CHAMBERLAIN“I was always told to hire people who are smarter than I am. However, I’ve learned that you should not hire people who think they are smarter than you, but people who are more passionate about that job than you are. I have also learned that I can train people for any skill set in my company, but I cannot train or teach them to fit into our company culture. I had to terminate management positions because they had the skills, but they did not fit into our culture. Culture comes first. Skills come second.”





3. Considering Acquisition at the Wrong Time

David Ehrenberg“In our early days, we had two acquisition offers that we almost accepted. With each, we went very far down the road, but, in the end, we decided not to pull the trigger. We avoided catastrophe because we didn’t go through with these offers — they would have been major mistakes. In hindsight, I realize both of them grossly undervalued our business, and they would have destroyed our momentum and ability to control our own destiny. We would have given up control, and we would have never been able to achieve what we have achieved.”


DAVID EHRENBERG, Early Growth Financial Services



4. Thinking in Dollars, Not Cents

HEIDI ALLSTOP“Part of a founder’s job is to make sure the company always gets the best possible deal — whether it’s in negotiating valuation, evaluating employees’ stock/salary or even choosing a law firm. Unfortunately, this frugal nature often has repercussions. Instead of thinking transactionally, think about these decisions in the grander scheme of things: How will that inflated valuation affect your next round? Will your employees stay motivated and loyal without being compensated respectably? Will another law firm need to redo all of your legal work down the line? Think bigger.”





5. Not Defining Co-Founder Roles and Goals

Shradha Agarwal“We started with three co-founders and while communication was great between two of us, the third co-founder was not always in tune. We left it alone for a long time, telling ourselves that titles didn’t matter — as long as the work was being done, we didn’t need to address specific roles and goals. But as the organization grew, there was no clarity, and our team didn’t know who to go to for answers. Moreover, being polite and avoiding conflict caused us to lose precious time and sunk deeper holes into our culture. The third co-founder eventually moved on, and we rebuilt.”





6. Leaving a Bad Apple to Rot

BRENNAN WHITE“The second-worst decision we’ve ever made was making a bad hire early on. The worst decision was to let that employee linger around long enough to do real damage to the culture. Almost overnight, the employee’s social impact changed the office from a place everyone wanted to be to the last place everyone wanted to be. Instead of making the correct choice for the good of the team, we tried to coach the employee for over a year. It took almost another year to get back the perfect balance of fun and productivity. Needless to say, that won’t happen again.”





7. Hiring Someone Without Checking References

Kelsey Meyer Influence & Co President & Co-Founder“We interviewed someone with an amazing resume and strong interview skills. On paper, the candidate was perfect. After three intensive interviews, we hired him. His skill set was not at all up to par with our needs, and we found out later that his resume was fairly fabricated. A quick reference check would have kept us from making this hiring mistake. At least we ended that relationship within two months, so the impact wasn’t too damaging.”


-KELSEY MEYER, Influence & Co.



8. Choosing the Wrong People

Andy Karuza“As a startup, you’re looking for people to join your team, but I advise you to be very choosy and completely understand your organization’s needs. If you bring on partners, you may be tempted to give away equity, but make sure you have a vested schedule for their interests in the company. A lot of people may start strong, but how they finish is what matters. Tie together an incentive program that encourages long-term commitment or eliminates people who aren’t ready to go the distance. It could drag you down if you have partners that tie up equity, but aren’t putting in the effort.”


-ANDY KARUZA, Brandbuddee



This article was originally published on StartupCollective.com.


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StartupCollectiven | gnuckx